I Hate EE Savings Bonds

There are many finance blogs extolling the virtues of these things – they’re totally tax-free when used for college, perfect little baby birthday gifts, they’re guaranteed to double in 20 years (something like 3ish% interest) – but I hate them.

I hate them because most of those baby gift bonds are face value $50 or something stupid. Sorry, grandma, but $50 ain’t even buying a textbook.

I hate them because the only way EE Savings Bonds are useful is if you have a shit ton of them. Let’s face it – if grandma gave you a face value $10,000 bond as a baby gift…..and repeated that each year for 18 years, you’d have plenty of tax-free college funds.

But people don’t do that. They think the bonds are cute, and they feel good about “contributing to your education” instead of just giving you the fucking Lego set you wanted.

EE Savings Bonds are fabulous for the 1%. It’s an excellent way to stuff at least $10k a year into a pretty good tax savings vehicle at a guaranteed 3ish% (if holding onto them for 20 years). And, to be fair, if you’ve maxed out your 401k and your Roth IRA, it’s not a terrible idea to stash away a few grand a year for your retirement.

But again, people don’t use EE Savings Bonds that way. They’re too cute, they’re too low-denomination, they make people feel like they’re doing something good by buying a $50 one, when really what they need to do is stash away piles and piles of them. They let people off the hook.